On May 20, 2020, the Financial Accounting Standards Board (FASB) completed deliberations and made the following decisions as they relate to the adoption of certain significant accounting standards:
- Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers – The FASB made the decision to amend and defer the adoption date of Topic 606, Revenue from Contracts with Customers, for franchisors that are not public business entities and all private companies which have not yet adopted ASC Topic 606. The effective date of ASC Topic 606 will be for annual reporting periods beginning after December 31, 2019, and interim reporting periods within annual reporting periods beginning after December 15, 2020.
- ASC Topic 842, Leases – The FASB affirmed its decision to amend and delay the effective date of ASC Topic 842 for private companies and private not-for-profit (NFP) entities. The new effective date of ASC Topic 842 will be for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.
- ASC Topic 842, Leases – The FASB also affirmed its decision to amend the effective date for NFP entities that have previously issued or are conduit bond obligors for securities that are traded, listed, or quoted on an exchange or an over-the-counter market and have not yet adopted ASC Topic 842 or made their financial statements available for issuance. For those entities, the effective date will be fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.
For each of these standards, early adoption remains permitted. The FASB also clarified that a public NFP entity that has issued a form of financial information reflecting the adoption of ASC Topic 842 but not the financial statements remains eligible for the deferral.